Santos Ltd. and Oil Search Ltd. entered a Merger Implementation Deed under which the two companies will combine via a Scheme of Arrangement.
The move follows the companies successfully completing reciprocal confirmatory due diligence which began on Aug. 6 and was extended for 1 week.
Terms are the same as reported in early August, namely that Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held on Aug. 2, 2021.
If the merger is implemented, Oil Search shareholders will own about 38.5% of the combine. Santos shareholders will have 61.5%.
The combined entity is expected to have a market capitalization of $21 billion (Aus.) and the merger would unlock pretax synergies of US$90-115 million/year, Santos has said.
Oil Search directors have unanimously recommended that shareholders vote in favor of the merger, subject to an independent expert concluding that the transaction is in the best interests of Oil Search shareholders and provided there is no superior proposal prior to implementation date.
The merger deal must also be approved by the Papua New Guinea Government through the PNG court.
The combine’s head office would be in Adelaide and led by Kevin Gallagher, current Santos managing director and chief executive officer. Oil Search would have three non-executive directors on the board.
Looking ahead, the key dates (subject to change) for the merger process are:
- First PNG court hearing Oct. 27
- Dispatch of scheme booklet to Oil Search shareholders Oct. 29
- Scheme meeting of Oil Search shareholders Nov. 29
- Second PNG court hearing Dec. 1
- Merger effective date Dec. 2
- Record date Dec. 9
- Implementation date Dec. 16
The merged entity would have a diversified portfolio of high-quality, long-life assets in Australia, Timor Leste (in the Timor Sea), Papua New Guinea, and the US (particularly Alaska).
There has been no public comment from ExxonMobil, operator of the PNG LNG project, or TotalEnergies, operator of the Papua LNG project.
